COLA Increase Watch 2023-2024

The 2023 COLA increase is 8.7%, according to the Social Security Administration.

It’s too early to figure out the 2024 COLA rate, but we’ll keep tracking inflation data and other factors that could impact the 2024 COLA increase here.

2022 – 2023 COLA

The Social Security Administration announced the 8.7% COLA increase in October 2022. It’s the largest COLA increase since 1981. The SSA expects to provide an additional $140 per month to roughly 70 million Americans who receive Social Security and Supplemental Security Income benefits.

The record-high 2023 COLA increase came on the heels of a sizeable 2022 increase.

The Social Security Administration announced 2022’s 5.9% COLA increase in October 2021. It was the largest increase in 40 years at the time, but the 8.7% 2023 COLA increase has it beat.

Soaring inflation, a resurgent economy and other factors have contributed to large COLA increases, according to the Social Security Administration.

The U.S. Bureau of Labor Statistics (BLS) compiles the CPI-W. It is the basis for COLA adjustments for military, federal and Social Security recipients.

To calculate yearly COLA adjustments, the Social Security Administration compares third-quarter inflation measurements from July, August and September to the same quarter in the previous year. In short, 2022 inflation data determined 2023 COLA rates, and 2023 inflation data will determine 2024 COLA rates.

CPI-W Measurement
	2021	2022	2023
July	267.789	292.219	TBD
August	273.567	291.629	TBD
September	274.31	291.854	TBD
Third quarter total	808.157	875.702	TBD
Average (rounded to the nearest 0.001)	269.386	291.901	TBD
Inflation According to the CPI-W	5.9%	8.7%	TBD

2023 – 2024 COLA (Cost-of-Living Adjustments) Increase Watch

2023 COLA & CPI Summary

• The January CPI-W (293.565) increased over the last 12 months by 6.3%.
• Since January 2022, the all items index has increased 6.4% before seasonal adjustment.
  • The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5% in January on a seasonally adjusted basis after a 0.1% increase in December.
    • The index for used cars and trucks declined 1.9% in January.
    • The food index increased 0.5% in January, and the food at home index increased 0.4% as well.
    • The energy index increased 2.0% in January.
• The index for all items less food and energy increased 0.4% in January.
• Since January 2022, the index for all items less food and energy increased by 5.6%, the energy index increased 8.7% and the food index increased by 10.1%.

2023 COLA Effective and Payment Dates:

• Retired military Veterans, U.S. Department of Veterans Affairs (VA) rates for compensation and pension for disabled Veterans and surviving families will go into effect Dec. 1, 2022. The first checks with the new rates went out on Dec. 30, 2022.
• Social Security benefits became effective with December 2022 benefits, payable in January 2023.
• Federal Supplement Social Security Income and Social Security Disability Insurance (SSDI) payment levels became effective for payments made for January 2023.

2023 COLA (Cost-of-Living Adjustments) Increase Results

Q3 (July-Sept.) 2022 COLA & CPI Summary

• The 2022 average Q3 (July-September) CPI-W (291.901) increased year over year by 8.7%.
  • The September CPI-W (291.854) increased year over year by 8.5%.
  • The August CPI-W (291.629) increased year over year by 8.7%.
  • The July CPI-W (292.219) increased year over year by roughly 9.1%.

Veterans’ Compensation Cost-of-Living Adjustment Act of 2022

On October 10, 2022, President Joe Biden signed the Veterans’ Compensation Cost-of-Living Adjustment Act of 2022 into law, which ties the Veterans benefit increases to Social Security COLA increases.

Once signed, the legislation will direct the VA to increase – as of Dec. 1, 2022 – the rates for VA disability, additional compensation for dependents, clothing allowances for certain disabled Veterans and Dependency and Indemnity Compensation (DIC) for surviving spouses and children.

While Social Security benefits are automatically adjusted annually to keep pace with inflation, Congress must pass legislation annually to provide COLA for Veterans and surviving family members receiving those types of compensation from VA.

Why a COLA Increase May Not Help Social Security Recipients

Senior citizen household spending may outpace COLA because the measurements that determine COLA don’t reflect significant expenses like healthcare and gas.

If Medicare climbs at an equal or higher rate, premiums may offset COLA increases. However, Medicare premiums will decrease in 2023 for the first time in more than ten years.

COLA (Cost-of-Living Adjustment) Affects These Programs and Stakeholders:

• Retired Military Veterans
• Disabled Veterans – See VA Disability Rate Tables
• Veterans’ Pension Benefits – Veterans Pension Rate Tables
• Survivor Benefit Annuitants – Survivors’ Pension Rate Tables
• Surviving Families of Veterans – Parents’ Dependency and Indemnity Compensation (DIC) Tables
• Social Security recipients
• Federal Civilian Retirees
• Supplemental Security Income (SSI)
• Social Security Disability Insurance (SSDI)
• Eligibility for Medicare Extra Help and Medicaid
• Federal and state food and housing assistance programs

Quarterly CPI-W for 2022 and 2023

Year	2022	2023	Year over Year Increase
Quarter 1	279.472	TBD	TBD
Quarter 2	288.380	TBD	TBD
Quarter 3	291.901	TBD	TBD
Quarter 4	292.183	TBD	TBD
Annual	287.984	TBD	TBD

Monthly CPI-W for 2022 and 2023

Month	2022 CPI-W	2023 CPI-W	Year over Year Change
January	276.296	293.565	6.3%
February	278.943	TBD	TBD
March	283.176	TBD	TBD
April	284.575	TBD	TBD
May	288.022	TBD	TBD
June	292.542	TBD	TBD
July	292.219	TBD	TBD
August	291.629	TBD	TBD
September	291.854	TBD	TBD
October	293.003	TBD	TBD
November	292.495	TBD	TBD
December	291.051	TBD	TBD

The table below shows estimated future cost-of-living adjustments (COLAs) as determined by assumptions in the 2022 Trustees Report.

COLA Estimates by Year

Year	COLA
2021	5.9%
2022	8.7%
2023	TBD
2024	TBD

The CPI-W takes into account eight major spending categories:

• Food and beverages
• Housing
• Apparel
• Transportation
• Medical care
• Recreation
• Education and communication
• Other goods and services

How COLA is Determined

The Bureau of Labor Statistics’ Consumer Price Index (CPI-W) determines the annual Cost-of-Living-Adjustment (aka Cost-of-Living Allowance). It is based on the percentage increase of the CPI-W from the third quarter of the previous year versus the current year’s third quarter (July, August, and September).

Veterans who retire during the current calendar year will receive a temporary partial COLA due to already receiving a military pay raise in January (View the 2022 Military Pay Charts here).

• The COLA increase is only set at the CPI-W if the increase is less than 2%.
• If inflation is between 2 to 3% then COLA is set at 2%.
• If the CPI-W is greater than 3% then COLA is set at 1% below the CPI-W.

COLA Versus Federal Pay Increases

Pay increases for current federal workers and COLA for retired workers often differ because they are based on changes in different economic variables.

Changes in private-sector wages and salaries determine federal pay increases. The government indexes federal civil service worker pay to private-sector salaries to ensure government pay remains competitive with the private sector.

Cost-of-living adjustments (COLA) ensure that a retiree’s income maintains buying power for the same amount of goods and services annually.

Year	COLA
2023	8.70%
2022	5.90%
2021	1.30%
2020	1.60%
2019	2.80%
2018	2.00%
2017	0.30%
2016	0.00%
2015	1.70%
2014	1.50%
2013	1.70%
2012	3.60%
2011	0.00%
2010	0.00%
2009	5.80%
2008	2.30%
2007	3.30%
2006	4.10%
2005	2.70%
2004	2.10%
2003	1.40%
2002	2.60%
2001	3.50%
2000	2.50%
1999	1.30%
1998	2.10%
1997	2.90%
1996	2.60%
1995	2.80%
1994	2.60%
1993	3.00%
1992	3.70%
1991	5.40%
1990	4.70%
1989	4.00%
1988	4.20%
1987	1.30%
1986	3.10%
1985	3.50%
1984	3.50%
1983	N/A
1982	7.40%
1981	11.20%
1980	14.30%
1979	9.90%
1978	6.50%
1977	5.90%
1976	6.40%
1975	8.00%